Correlation Between Franklin Templeton and Vanguard Growth

Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and Vanguard Growth at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Franklin Templeton and Vanguard Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Templeton Investments and Vanguard Growth Index, you can compare the effects of market volatilities on Franklin Templeton and Vanguard Growth and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Franklin Templeton with a short position of Vanguard Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and Vanguard Growth.

Diversification Opportunities for Franklin Templeton and Vanguard Growth

0.3

Correlation Coefficient

Franklin Templeton  Vanguard Growth

Weak diversification

The 3 months correlation between Franklin and Vanguard is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton Investments and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index and Franklin Templeton is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Franklin Templeton Investments are associated (or correlated) with Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Vanguard Growth go up and down completely randomly.

Pair Corralation between Franklin Templeton and Vanguard Growth

If you would invest  37,378  in Vanguard Growth Index on September 12, 2024 and sell it today you would earn a total of  5,312  from holding Vanguard Growth Index or generate 14.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	3.13%
Values	Daily Returns

Franklin Templeton Investments  vs.  Vanguard Growth Index

Franklin Templeton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Templeton Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Franklin Templeton is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Vanguard Growth Index

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Index are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Vanguard Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Templeton and Vanguard Growth

The main advantage of trading using opposite Franklin Templeton and Vanguard Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, Vanguard Growth can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vanguard Growth will offset losses from the drop in Vanguard Growth's long position.

The idea behind Franklin Templeton Investments and Vanguard Growth Index pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.